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McCormick (MKC) Looks Tempting: Up More Than 10% in 6 Months
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McCormick & Company, Incorporated (MKC - Free Report) appears tempting, with its share up 12.3% in the past six months against the industry’s decline of 1.3%. The spices, seasoning mixes, condiments and other flavorful product company has outperformed the Zacks Consumer Staples sector, which dropped 0.9% in the same period.
This Zacks Rank #2 (Buy) company has been benefiting from its brand strength, prudent acquisitions and efficient saving programs. Solid marketing and innovative initiatives have been working well for McCormick. Encouragingly, MKC raised its adjusted operating income and earnings per share view for fiscal 2023 when it reported strong second-quarter fiscal 2023 results, wherein earnings and sales increased year over year, and the bottom line beat the Zacks Consensus Estimate.
For fiscal 2023, the adjusted operating income is likely to grow 10-12% now, up from the prior guidance of 9-11% growth. Management envisions fiscal adjusted EPS in the band of $2.60-$2.65 compared with the earlier view of $2.56-$2.61. The bottom-line view suggests growth from $2.53 recorded in fiscal 2022.
Net sales are still expected to increase 5-7%, fueled by pricing actions. The company anticipates seeing solid growth via brand strength, brand marketing, new products, category management and differentiated customer engagement.
Image Source: Zacks Investment Research
Factors Working Well for McCormick
McCormick has fortified its presence through acquisitions. In December 2020, MKC bought 100% stake in FONA International, LLC and some of its affiliates. FONA’s diverse portfolio helps McCormick bolster its value-add offerings and expand the flavor solutions segment into attractive categories.
In November 2020, McCormick also completed the acquisition of the parent company of Cholula Hot Sauce, a premium Mexico-based hot sauce brand. The buyout of Cholula accelerates MKC’s growth potential across the condiment platform and widens the product portfolio in the hot sauce category.
Further, the company's acquisition of the food division of RB Foods (concluded in August 2017) is noteworthy. Some of the other noteworthy acquisitions of McCormick are Italy-based Enrico GiottiSpA (December 2016) as well as Australia-based Botanical Food Company (April 2016).
McCormick is focused on saving costs and enhancing productivity through its ongoing Comprehensive Continuous Improvement (“CCI”) program. Started in 2009, McCormick’s CCI program helped the company reduce costs and enhance productivity.
The company has used CCI savings to increase investments, thereby leading to higher sales and profits. MKC’s second-quarter fiscal 2023 adjusted gross profit margin expanded 310 basis points due to efficient pricing, an improved product mix and cost savings from the CCI and Global Operating Effectiveness ("GOE") programs.
The GOE program aims at optimizing MKC’s supply chain and cost structure. McCormick expects savings from its GOE program to scale up as fiscal 2023 progresses. It expects savings from the GOE program to have an 800-basis point impact on adjusted operating profit growth in fiscal 2023. Savings from the CCI program are likely to be $85 million in fiscal 2023. Such cost savings, coupled with effective pricing actions, are likely to continue enhancing the company’s profits in the future.
Other Solid Consumer Staple Bets
Inter Parfums (IPAR - Free Report) , which manufactures, markets and distributes a range of fragrances and fragrance-related products, currently sports a Zacks Rank #1 (Strong Buy). IPAR has an expected EPS growth rate of 15% for three to five years. You can see the complete list of today’s Zacks #1 Rank stocks here
The Zacks Consensus Estimate for Inter Parfums’ current financial-year sales indicates 19.7% growth from the year-ago reported figure. IPAR has a trailing four-quarter earnings surprise of 45.9%, on average.
Flowers Foods (FLO - Free Report) , a packaged bakery food product company, currently carries a Zacks Rank #2. FLO has a trailing four-quarter earnings surprise of 7.6%, on average.
The Zacks Consensus Estimate for Flowers Foods’ current fiscal-year sales suggests growth of 6.7% from the corresponding year-ago reported figure.
Helen of Troy (HELE - Free Report) , a provider of several consumer products, currently has a Zacks Rank #2. HELE’s expected EPS growth rate for three to five years is 8%.
The Zacks Consensus Estimate for Helen of Troy’s current fiscal-year sales suggests a decline of 2.9% from the year-ago reported numbers. HELE has a trailing four-quarter earnings surprise of 8.1%, on average.
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McCormick (MKC) Looks Tempting: Up More Than 10% in 6 Months
McCormick & Company, Incorporated (MKC - Free Report) appears tempting, with its share up 12.3% in the past six months against the industry’s decline of 1.3%. The spices, seasoning mixes, condiments and other flavorful product company has outperformed the Zacks Consumer Staples sector, which dropped 0.9% in the same period.
This Zacks Rank #2 (Buy) company has been benefiting from its brand strength, prudent acquisitions and efficient saving programs. Solid marketing and innovative initiatives have been working well for McCormick. Encouragingly, MKC raised its adjusted operating income and earnings per share view for fiscal 2023 when it reported strong second-quarter fiscal 2023 results, wherein earnings and sales increased year over year, and the bottom line beat the Zacks Consensus Estimate.
For fiscal 2023, the adjusted operating income is likely to grow 10-12% now, up from the prior guidance of 9-11% growth. Management envisions fiscal adjusted EPS in the band of $2.60-$2.65 compared with the earlier view of $2.56-$2.61. The bottom-line view suggests growth from $2.53 recorded in fiscal 2022.
Net sales are still expected to increase 5-7%, fueled by pricing actions. The company anticipates seeing solid growth via brand strength, brand marketing, new products, category management and differentiated customer engagement.
Image Source: Zacks Investment Research
Factors Working Well for McCormick
McCormick has fortified its presence through acquisitions. In December 2020, MKC bought 100% stake in FONA International, LLC and some of its affiliates. FONA’s diverse portfolio helps McCormick bolster its value-add offerings and expand the flavor solutions segment into attractive categories.
In November 2020, McCormick also completed the acquisition of the parent company of Cholula Hot Sauce, a premium Mexico-based hot sauce brand. The buyout of Cholula accelerates MKC’s growth potential across the condiment platform and widens the product portfolio in the hot sauce category.
Further, the company's acquisition of the food division of RB Foods (concluded in August 2017) is noteworthy. Some of the other noteworthy acquisitions of McCormick are Italy-based Enrico GiottiSpA (December 2016) as well as Australia-based Botanical Food Company (April 2016).
McCormick is focused on saving costs and enhancing productivity through its ongoing Comprehensive Continuous Improvement (“CCI”) program. Started in 2009, McCormick’s CCI program helped the company reduce costs and enhance productivity.
The company has used CCI savings to increase investments, thereby leading to higher sales and profits. MKC’s second-quarter fiscal 2023 adjusted gross profit margin expanded 310 basis points due to efficient pricing, an improved product mix and cost savings from the CCI and Global Operating Effectiveness ("GOE") programs.
The GOE program aims at optimizing MKC’s supply chain and cost structure. McCormick expects savings from its GOE program to scale up as fiscal 2023 progresses. It expects savings from the GOE program to have an 800-basis point impact on adjusted operating profit growth in fiscal 2023. Savings from the CCI program are likely to be $85 million in fiscal 2023. Such cost savings, coupled with effective pricing actions, are likely to continue enhancing the company’s profits in the future.
Other Solid Consumer Staple Bets
Inter Parfums (IPAR - Free Report) , which manufactures, markets and distributes a range of fragrances and fragrance-related products, currently sports a Zacks Rank #1 (Strong Buy). IPAR has an expected EPS growth rate of 15% for three to five years. You can see the complete list of today’s Zacks #1 Rank stocks here
The Zacks Consensus Estimate for Inter Parfums’ current financial-year sales indicates 19.7% growth from the year-ago reported figure. IPAR has a trailing four-quarter earnings surprise of 45.9%, on average.
Flowers Foods (FLO - Free Report) , a packaged bakery food product company, currently carries a Zacks Rank #2. FLO has a trailing four-quarter earnings surprise of 7.6%, on average.
The Zacks Consensus Estimate for Flowers Foods’ current fiscal-year sales suggests growth of 6.7% from the corresponding year-ago reported figure.
Helen of Troy (HELE - Free Report) , a provider of several consumer products, currently has a Zacks Rank #2. HELE’s expected EPS growth rate for three to five years is 8%.
The Zacks Consensus Estimate for Helen of Troy’s current fiscal-year sales suggests a decline of 2.9% from the year-ago reported numbers. HELE has a trailing four-quarter earnings surprise of 8.1%, on average.